MUMBAI—During the financial downturn in 2008-2009 Citibank India, like many other banks in the country, struggled with high bad debt on credit cards and personal loans issued in the go-go years.

The bank has since sought to be more cautious about whom it lends to. Bad loans fell to 1.47% of total loans for the financial year that ended March 31 from 2.63% as of March 31, 2009, and the Citigroup Inc. unit's profits have risen steadily...